What is Flair Exchange?
Flair Exchange is a Funding Portal that unites founders and funders who share a common vision. Our funding platform provides debt and equity based funding. The Flair Exchange Platform is set up to leverage additional sources of capital beyond banks and accredited investors by handling funding sources from accredited and non-accredited sources.
How does Flair Exchange Platform work?
Businesses seeking to raise capital on the Flair Exchange platform will be required to provide relevant market and financial information to Flair Exchange. Flair Exchange will analyze the business's risk factors and financial condition through our proprietary standardized risk assessment process and propose investment terms to the business. If the business accepts the proposed terms and conditions, it will then create an offering listed on Flair Exchange.
Investors will be able to sign up on Flair Exchange to view offerings and make investments. Flair Exchange facilitates payments - which could be monthly, quarterly, or annually - to investors.
Is Flair Exchange Platform regulated?
Flair Portal LLC, an SEC registered funding portal (CRD #299140) and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), operates sections of flairexchange.com and acts as a Funding Portal.
What is Regulation Crowdfunding?
Regulated Crowdfunding ("Reg CF") provides a framework for registered funding portals such as Flair Portal LLC to operate an online platform for businesses to offer and sell securities in reliance on Section 4(a)(6). Regulations governing the sale of securities is very intricate and known to be very costly and challenging for small businesses or startups to sell securities to the public. The JOBS Act was enacted to provide less expensive alternatives for companies to sell securities through the internet. Section 4(a)(6), in particular, allows businesses to sell securities to anyone, not just investors with a certain level of income and net worth.
Who can invest in businesses listed on Flair Exchange?
Currently, anyone with a US bank account can make investments on Flair Exchange Platform. The one exception is Canadian citizens will not be able to invest at the moment.
You no longer have to be wealthy to have access to investment opportunities other than the public market! For more information, please refer to the Flair Exchange FAQ for Investors.
We plan to offer other forms of payment methods in the future. Stay tuned!
Who can raise capital through an offering on Flair Exchange Platform?
Several types of business are eligible to raise capital through an offering on Flair Exchange Platform provided the enterprise meets the specific qualifications outlined in Regulation Crowdfunding. These requirements, among others, require that the issuer be: legally organized under the laws of a state or territory of the United States or the District of Columbia a company that is not subject to specific reporting requirements of the Securities Exchange Act of 1934 a group that is not an investment company as defined in the Investment Company Act of 1940 or a business excluded from such definition under Section 3(b) or 3(c) thereof a company (along with its affiliates) that has not sold more than $5 million through Section 4(a)(6) crowdfunding offerings in the previous 12-month period.
Does Flair Exchange accept any business that applies to list an offering?
No. Each application must meet preliminary business requirements set by Flair Exchange and strict legal requirements under Regulation Crowdfunding. Additionally, Flair Exchange completes a comprehensive standardized risk assessment of every proposed offering. In some instances, Flair Exchange will choose not to list offerings because of the characteristics of the business or the funding request.
How are the terms of an offering determined by Flair Exchange?
Every business offering undergoes a standardized assessment process by Flair Exchange Platform. The assessment is primarily intended to determine if a prospective issuer fits the business categories offered on Flair Exchange, based on the objective criteria established by Flair Exchange. If Flair Exchange determines a good fit, Flair Exchange will help the Issuer define the terms to submit to their prospective investors. When assessing the feasibility of a proposed offering, Flair Exchange typically considers the following key factors:
Key Person Experience and Skills - Flair Exchange performs analysis of the Key Person’s experience, capabilities, and skills in the business.
Historical Financial Performance - comparison of key financial ratios to industry standards to evaluate the business’s strengths and weaknesses.
Projected Impact of Proposed Funding Terms - Flair Exchange analyzes proposed funding terms' to forecast the potential impact on the business's overall financial condition.
Credit History Information - a credit history evaluation of the business, as well as personal credit histories of key personnel, will be evaluated.
Leadership Experience and Stability - the level of industry expertise and length of tenure of the business’s leadership.
Industry Risk - overall success/failure rate in the relevant industry in which the business operates, according to historical data the final investment terms offered to potential investors on Flair Exchange reflect Flair Exchange's and the issuer’s good-faith assessment and are not a guarantee or guidance of performance of any kind. Investing in securities involves risks, and investors should consider their investment objectives before investing.
Why can only U.S. businesses raise capital on Flair Exchange?
Flair Exchange Platform operates under Regulation Crowdfunding, which allows only U.S. businesses to raise capital by crowdfunding in the United States.
Will investors receive any equity interests or any voting or management rights?
Most offerings on Flair Exchange Platform are debt-based or Revenue Share Note. Investors will not receive any voting or management rights in a business as a result of their investments in debt offerings. See “Investors FAQ” for further information.
What is a revenue sharing note?
Revenue-based financing sometimes referred to as royalty investing or advance revenue purchases, a familiar financing format in oil and gas development, film production, biotech/pharmaceutical development and numerous other industries.
On Flair Exchange Platform, you can invest in fractions of a revenue sharing loan. Each portion of a revenue sharing loan is called a revenue sharing note. Instead of requiring a business to pay a fixed amount each month over a specified period (as typically required under a term note), a revenue sharing note on Flair Exchange requires a business to pay a fixed percentage of gross revenues for a predetermined number of years and/or until the business fulfills a predetermined Total Payment Amount. The Total Payment Amount is calculated by multiplying the principal amount of the revenue sharing note by the applicable "investment multiple."
The exact length of time that it will take a business to pay each investor in full cannot be known in advance, payments are not guaranteed and investors may lose all of the principal if the business cannot make its payments.
What makes a revenue sharing note unique?
Revenue sharing notes on Flair Exchange is unique because we provide entrepreneurs with capital in exchange for paying a percentage of future revenues to their investors. Investors are technically purchasing a record – a debt security – investors can participate in potential upsides of businesses they invest in. The more investors help the entrepreneurs by buying their products and services or advertising as brand advocates, the more revenue the business will generate and the faster the business will be able to pay its investors. The flexible payment structure of revenue sharing is directly influenced by the success of the business and helps align the economic interests of the entrepreneurs and their investors.
See “Investors FAQ” for more information about Revenue Sharing Note and other available funding classes on Flair Exchange.
What happens if the campaign doesn’t reach its goal?
At the end of a bidding process, the system will calculate which offers have been accepted and which need to be returned. If your bid is rejected, you will receive an email that informs you that your bid was not accepted and your money will be returned to your account. This information will also be posted on your investor dashboard. The money will be transferred via ACH from the escrow account back to your account at the bank it originated from.
Do I need to set up an account on Flair Exchange Platform?
All offerings are open to the public to view. You need to open an account and provide information about yourself if you want to invest in a particular offering or participate in the online forum for communication amount investors or with the business. Pursuant to Regulation Crowdfunding, all communications between or among the business and investors regarding the notes offered must be on our site.
An account with Flair Exchange Platform enables you to manage and stay informed about your investments and to communicate with issuers and other investors. You do not need to transfer money to open an account. Your money can stay in your personal or company bank account and then you can transfer funds to an escrow account if you make a bid.
What is crowdfunding?
Crowdfunding is the collection of finance from backers—the "crowd"—to fund an initiative and usually occurs on Internet platforms. The concept has been used for centuries in a variety of contexts, all of which refer to companies or individuals using the crowd to carry out an action. In the context of Flair Exchange platform, it means using the crowd to pool together increments of money to invest in initiatives that you as an investor believe in.
How do I invest?
Sign up for free on Flair exchange, review the different offerings that you might be interested in, read the Form C and application documents about the business, investment, and related risks. If you decided to invest, complete your profile by pressing “Get Approved” on top or navigate to the “Accreditation” tab on your investor dashboard.
You can directly start investing once you submit your profile application.
What is the minimum investment?
The minimum and maximum investment is different for each offering and is set by the entrepreneurs.
Does Flair Exchange offer investment recommendations?
No. We are legally not allowed to make any recommendations or advice. We encourage all investors to do their own due diligence or if necessary, seek expert advice to vet any offerings on Flair Exchange.
If the business is funded and I'm an investor, how do I get paid back?
Depending on the offering you invested in whether debt or equity offering. For example, if you invested in a business with Revenue Share Note, the business will make monthly, quarterly, or annual repayments to you until the repayment amount is paid. There is no guarantee of any payment and you can lose your entire investment.
The founder will direct payments via ACH from its account to your designated bank account. You will be notified via email when money is transferred and you will also be able to view the status of your investment on your investor dashboard.
What updates should I expect after investing?
Under Regulation CF, the business must issue an annual report once a year with financial statements and a discussion of its business, no later than 120 days after the end of their fiscal year; however, there are some limited exceptions that the issuer may no longer be required to file an annual report.
We at Flair Exchange try our best to maintain the relationship with all entrepreneurs and we encourage them to keep using the campaign page to communicate with investors. You can ask the entrepreneurs questions using the Q&A section of the campaign page or send them direct messages. Flair Exchange Platform cannot assure that the entrepreneurs will communicate with investors using our platform and file their annual reports.
When businesses can stop filing annual reports?
The following are the possible scenarios for filing annual reports: (i) the issuer (“business”) is required to file reports under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, (ii) the issuer has filed, since its most recent sale of securities pursuant to Regulation CF, at least one annual report pursuant to the Section 202(b)(2) of Regulation CF and has fewer than 300 holders of record, (iii) the issuer has filed, since its most recent sale of securities pursuant to Regulation CF, the annual reports required pursuant to the regulation for at least the three most recent years and has total assets that do not exceed $10,000,000, (iv) the issuer or another party repurchased all of the securities issued in reliance upon Regulation CF, including any payment in full of debt securities or any complete redemption of redeemable securities or (v) the issuer liquidates or dissolves its business in accordance with state law. Accordingly, an investor may not continually have current financial information about the business.
Although we encourage all founders to keep filing regardless of their obligation, founders may decide to terminate filing annual reports once they are not required by law. Following completion of an offering conducted through Flair Exchange Platform, there may or may not be an ongoing relationship between the business and Flair Exchange.
Do I have to be an accredited investor to invest on Flair Exchange Platform?
No, but you must be 18 years or older and you will be subject to the rolling twelve-month investment limitations of Regulation CF.
To what extent does Flair Exchange Platform assess each business that applies?
Each application must meet preliminary business requirements set by Flair Exchange as well as legal requirements under Regulation Crowdfunding. Flair Exchange also completes a standardized risk assessment of every proposed offering. Based on this risk assessment, Flair Exchange Platform considers the business’s key person aptitudes, historical financial performance, credit history (which sometimes includes personal credit histories of business officers), industry experience of key personnel, and certain indicators of the risk of the industry in which the business operates. Based on this risk assessment, Flair Exchange Platform sets the range of investment terms available for the auction.
Flair Exchange Platform’s risk assessments are not a guarantee of success. Investing in loans small businesses are very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Before making an investment decision, Investors should review the business’s Form C for a complete description of its business and offering information as well as the comments and responses to questions posted on the discussion page for the offering. Each investor is ultimately responsible for conducting their own independent review of business documentation and perform their own independent due diligence.
Will investors receive any equity interests or any voting or management rights?
Since most investments in our platform are debt-based (or Revenue Share Note), investors will not receive any voting or management rights in a business as a result of their investments. Flair Exchange might offer other classes of investment, including convertible notes (or SAFE), and stocks. You might receive voting or management rights in certain stock investment and in the event convertible notes convert your investment to stocks that have voting or management rights. Therefore, we highly recommend that each investor review investment offerings carefully.
If I don’t get equity, how is this an investment?
Equity is only one kind of investment; there are three main types of investments - equity, debt and cash equivalents. On Flair Exchange Platform, most of our offerings are debt investments; it's similar to purchasing bonds instead of stocks. Payments to debt investors are typically tied interest rate or total return and allow investors to receive regular cash payments.
Payment terms will be defined in the investment contract. Equity investments are considered to be riskier than debt investments because equity investors in a private company usually need the company to go public or get acquired before they receive any payment.
However, despite the fact you will be making a debt investment, there is no guarantee of any payment and you can lose your entire investment. See Risk Warnings.
What can investors expect to receive when they invest through revenue sharing notes on Flair Exchange?
Each offering of revenue sharing notes on Flair Exchange Platform has a fixed investment multiple and/or maturity date. Investments with fixed investment multiple can help investors determine the total return to investors before Flair Exchange deducts fees. For example, if the investment multiple is 3.0, that means investors can expect to be paid 3.0x their original investments before Flair Exchange deducts fees.
Note that debt securities offered on Flair Exchange are not guaranteed or insured, and investors may lose some or all of the principal invested subject to an issuer’s ability to adequately service the debt and not default.
For risks associated with revenue sharing notes, see ‘Risk Warnings.’
How is a Revenue Sharing Note different from a traditional term note?
A term note typically carries a fixed interest rate and a monthly repayment schedule with a set maturity date. A business that has issued term notes is required to make fixed monthly payments to its investors irrespective of its operational performance.
In contrast, revenue sharing notes on Flair Exchange requires the business to make monthly payments equal to a fixed percentage of its monthly gross revenue until it pays the predetermined total amount or based on an agreed number of years. There is also a certain risk inherent in revenue sharing notes. See Risk Warnings.
Why should investors consider investing through revenue sharing notes on Flair Exchange?
Investors at Flair Exchange should consider investing via revenue sharing notes because a revenue sharing note provides payment flexibility to a business based on its performance, payments made to investors will also vary. If the business performs better than expected, the investors will receive compensation in a shorter period. If the business performance is worse than expected, the investors will receive reimbursement over a more extended period.
For risks associated with revenue sharing notes, see Risk Warnings.
What other types of securities offered, and the risks associated with each type?
Most securities offered on Flair Exchange are debt securities. One form of debt security is Revenue Share Note, which we described above. The other type is a simple loan agreement, which is similar to traditional loans such as a mortgage or consumer loans. The simple loan agreement has a fixed payment schedule that you as an investor will know in advance. Debt securities could be less risky than equity securities. However, the business you are investing in might not be able to pay back.
The other form of security we might offer is convertible securities. Convertible notes will convert your investment to stocks in the future once the business raises a priced funding round. You as an investor will become a shareholder in the company. The most popular type of convertible note is SAFE (Simple Agreement for Future Equity).
Investors will not receive any equity rights in debt investments. As for convertible notes, if converted to stocks in the future, there may be additional classes of equity with rights that are superior to the class of equity sold through Flair Exchange.
A well-established businesses run by capable entrepreneurs can create a priced offering on Flair Exchange where investors will receive stock and become shareholders in the business. Like the stock market, you as an investor will buy equity at a fixed price per share for a corporation (or unit for a share in a limited liability company). Unlike investment in publicly listed companies, investment in crowdfunding has an increased illiquidity risk. See Risk Warnings.
Investing in the early stages of a business may come with increased speculative risk in connection whether the venture succeeds at all as well as the illiquidity risks. You can read more about the crowdfunding investment and the risks involved in the investor bulletin on the Securities and Exchange Commission website for investors (link: https://www.investor.gov/).
Where is my money held?
Flair Exchange is prohibited by the SEC to hold the money in its bank account.
For each offering, an escrow account will be set up to hold funds during the bidding process. This escrow account will be closed at the end of bidding with funds transferred either to the Founder or returned to Funders.
Are there any restrictions on my ability to transfer my investment?
Any securities issued in an offering conducted under Regulation Crowdfunding are subject to a one-year restriction on transfer, unless such transfer is made: (i) to the issuer of the securities; (ii) to an accredited investor; (iii) as part of a registered offering; or (iv) to a family member of the purchaser or certain trusts. The promissory notes issued by businesses using our funding portal may contain additional restrictions on transfer. Investments on Flair Exchange Platform should be viewed as illiquid investments meaning you cannot sell the securities quickly and there may be no market for the investments when you are able to resell.
What happens in the case of default by a business?
A business loan is considered in “Default” when the borrower has failed to make payments for 121 or more days. The loan becomes “Charged Of” when there is no longer a reasonable expectation of further payments. Charge-of occurs no later than when a loan is 160 days past due or 30 days after the default status is reached. Flair Exchange Platform will not pursue repayment of a loan once it has been declared charged of. Investors will no longer receive principal and interest payments. Investors may seek to recover remaining principal investment and past due interest from the borrower directly.
What happens if the business misses a payment?
Unless a deferral is permitted by the investor, the payment is deemed to be in default if it is not paid within five (5) days of the due date. If payment is in default, then all unpaid amounts shall be immediately due and payable.
Flair Exchange Platform will notify you via email that there has been a late payment. The Late Payment Fee will be prorated and then passes back to you in the next payment cycle.
What happens if the business pays off its loan early?
If the loan had a predetermined “Total Payment Amount”, an issuer may pay off all of a loan in its entirety at any time by paying you any unpaid parts of the repayment amounts for the loan.
Flair Exchange Platform will inform you via email and on your investor dashboard that an issuer has paid off its loan. You will receive a second notification via email once the transfer of your principal to your personal or company account has been initiated. This amount will be posted on your investor dashboard as pending until it is transferred.
How can I cancel my investment?
Investors may cancel an investment commitment until forty-eight (48) hours prior to the deadline identified in an Issuer’s offering materials posted on the Site.
You will need to access your investor dashboard to cancel your bid. After you enter a cancellation, the system will immediately cancel your bid. After cancellation, you will be notified via email and on the investor dashboard that your bid has been canceled. If you cancel immediately after you bid, the money will not be transferred to the escrow account. If you cancel your bid after the money has been transferred from your bank account to the escrow account, you will have to wait until the end of the auction to receive your refund.
Can the issuer cancel my investment?
Yes. Founders can decide to cancel any investment commitment without specifying any reason. Once the fundraising is completed and the investor and founders countersigned the investment agreement, then the investment is finalized and can no longer be canceled.
Every investor (“Investor”) should know that an investment in a single company or multiple companies (each, an “Issuer” or “Business”) on the Flair Exchange funding portal platform (“Flair Exchange”) involves high risk, regardless of any assurance provided by the Issuer. There can be no assurance that (i) any information or projection by the Issuer has been validated or is reliable, (ii) an Issuer will accomplish its business goals, or (iii) an Investor will receive a return of any part of its investment. These considerations, among others, should be carefully evaluated before making an investment in an Issuer through its offering on Flair Exchange.
Risk Inherent in Crowdfunding Investments; an Investor May, and Frequently Does, Lose All of Its Investment
Investments in crowdfunding involve high risk. Businesses face significant financial and operating risks. Targeted or projected returns may never be realized and/or may not be adequate to compensate an Investor for risks taken. Loss of an Investor’s entire investment is possible and can easily occur. The timing of any return on investment is highly uncertain. Businesses enter highly competitive environments and only a small percentage of those companies survive and prosper. Businesses often experience unexpected problems in product development, manufacturing, marketing, financing, and general management, among others, which frequently cannot be solved. In addition, businesses may require substantial financing, which may not be available through institutional private placements, the public markets or otherwise.
Investment in New Concepts
The value of an Investor’s investment in new concepts and initiatives may be susceptible to factors affecting the industry and/or to risk greater than an investment in a product that invests in a broader range of securities. For example, new concepts might have exposure to government regulation, making these companies susceptible to changes in government policy and delays or failures in securing regulatory approvals.
Changing Economic Conditions
The success of any investment activity is determined by general economic conditions. The availability, unavailability, or hindered operation of external credit markets, equity markets, and other economic systems which an individual Business may depend upon to achieve its objectives may have a significant negative impact on a Business’s operations and profitability. The stability and sustainability of growth in global economies may be affected by terrorism, acts of war, or many other unpredictable events. There can be no assurance that such markets and economic systems will be available or will be available as anticipated or needed for an investment in a Business to succeed.
Future and Past Performance
The past performance of a Business or its management is not indicative of a Business’s future results. There can be no assurance that targeted results will be achieved. Loss of principal is possible, and even likely, on any investment.
Difficulty in Valuing Crowdfunding Investments
It is extremely difficult to determine values for any Business. Besides the difficulty of determining the magnitude of the risks applicable to a Business and the likelihood that a given venture will succeed, there will be no readily available market for a Business’s equity securities, and hence, an Investor’s investments will be difficult to value.
Lack of Information for Monitoring and Valuation
The Investor may not be able to obtain all the information it would want regarding a particular Business, on a timely basis or at all. The Investor may not be aware on a timely basis of material adverse changes that have occurred regarding certain of its investments. Because of these difficulties, and other uncertainties, an Investor may not have accurate information about a Business’s current value.
The Absence of Liquidity and Public Markets
An Investor’s investments will be private, illiquid holdings. There will be no public markets for the securities held by the Investor, and no readily available liquidity mechanism for any of the investments.
Legal and Regulatory Risks Associated with Crowdfunding
There is no assurance that a Business will comply with all requirements mandated by federal laws permitting private company to fundraise from retail investors on a Title III crowdfunding portal such as Flair Exchange, whether before, during or after its offering on Flair Exchange.
Many tax risks relate to investments in Crowdfunding are difficult to address and complicated. Consult your tax advisor for information about the tax consequences of debt-based and equity-based securities offered on Flair Exchange.
Limited Operating History of Businesses
A business may be a newly formed entity with little or no operating history. Each offering should be evaluated because the issuer’s business plan and projections may not prove accurate and that the issuer will not achieve its objective. Past performance of an issuer or its team is not predictive of future results.
Lack of Investor Control
Usually, investors in Business on Flair Exchange will not make decisions with respect to the Business’s activities and affairs, except if indicated otherwise in the offering materials.
Certain information regarding the business will be highly confidential. Competitors may benefit from such information if it is ever made public, and that could cause adverse economic consequences to the Investors.
Forward Looking Statements
The information an issuer provides to Investors may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by their not relating strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,” “estimates”, “expects”, “projects”, “intends”, “plans”, “believes” and words and terms of similar substance for discussions of future operating or financial performance. Examples of forward-looking statements include, but are not limited to, statements regarding: (i) the adequacy of a Business’s funding to meet its future needs, (ii) the revenue and expenses expected over the life of the Business, (iii) the market for a Business’s goods or services, or (iv) other similar matters.
Each Business’s forward-looking statements are based on management’s current expectations and assumptions regarding the Business’s business and performance, the economy and other future conditions and forecasts of future events, circumstances, and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. The Business’s actual results may vary materially from those expressed or implied in its forward-looking statements. Important factors that could cause the Business’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political, and social conditions.
Any forward-looking statement made by a Business speaks only as of the date on which it is made. Issuers are under no obligation to, and expressly disclaim any obligation to, update or alter their forward-looking statements, whether because of new information, subsequent events or otherwise.
The foregoing risks do not purport to be a complete explanation of all the risks involved in acquiring equity or debt securities in a Business. Each Investor is urged to seek its own independent legal and tax advice and read the investment documents before making a determination whether to invest in a Business through Flair Exchange.
You Are Solely Responsible for Determining an Investment is Appropriate for You
Potential investors acknowledge and agree that they are solely responsible for determining their own suitability for an investment or strategy on the Site and must accept the risks associated with such decisions, which include the risk of losing the entire amount of their principal. Investors must be able to afford to lose their entire investment.
The Site has no special relationship with or fiduciary duty to potential investors and investors’ use of the Site does not create such a relationship. Potential investors agree and acknowledge that they are responsible for conducting their own legal, accounting and other due diligence reviews of the investment opportunities posted on the Site.
EACH INVESTOR IS STRONGLY ADVISED TO CONSULT LEGAL, TAX, INVESTMENT, ACCOUNTING AND/OR OTHER PROFESSIONALS BEFORE INVESTING, AND TO CAREFULLY REVIEW ALL THE SPECIFIC RISK DISCLOSURES PROVIDED AS PART OF ANY OFFERING MATERIALS, AND TO ASK EACH ISSUER OFFERING SECURITIES ANY QUESTIONS OR FOR ADDITIONAL INFORMATION PRIOR TO MAKING AN INVESTMENT.
There is no independent governmental or regulatory review of the offering or offering materials
No governmental agency has reviewed the investment opportunities posted on this Site and no state or federal agency has passed upon either the adequacy of the disclosure contained therein or the fairness of the terms of any such investment opportunity.
The exemptions relied upon for the investment opportunities posted on the Site are significantly dependent upon the accuracy of the representations of the Issuers offering securities through the Site and the potential investors registered with the Site. These risks highlighted in the following are non-exhaustive and are intended to highlight certain risks associated with investing in securities that are not registered with the SEC.
Restriction on Resale of Securities Offered
The securities offered on the Site are only suitable for potential investors who are familiar with and willing to accept the high risks associated with private investments. Securities sold through this Site are restricted and not publicly traded and, therefore, are illiquid unless registered with the SEC.
Securities issued in a transaction pursuant to Section 4(a)(6) of the Securities Act may not be transferred by any purchaser of such securities for a one-year period after such securities were issued, unless such securities are transferred: (i) to the issuer of the securities, (ii) to an “accredited investor” (as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act) or such purchaser has reasonable belief that such transferee is an “accredited investor”, (iii) as part of an offering registered with the SEC, or (iv) to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
The issuer may not generate enough revenue to make payments.
Payments under the issuer’s Revenue Sharing Note are based, in part, upon net revenues. If the issuer is unable to generate net revenues, then it may be unable to make payments to the investor under the note.
Lack of control and no say in the operations of the business.
Because the issuer's founders, directors and executive officers may be among its largest stockholders, and the offering involves the issuance of debt rather than equity, they may be able to exert significant control over the issuer's business and affairs and may even have actual or potential interests that diverge from those of other investors. This may worsen as time goes on if the holdings of the issuer's directors and executive officers increase upon vesting or other maturation of exercise rights under options or warrants they may hold, or in the future be granted. In addition to holding or controlling board seats and offices, these persons may well have significant influence over and control of corporate actions requiring shareholder approval, separate from how the issuer's other stockholders, including investors, may vote in a given offering. In the case if the issuer is issuing debt and considering the factors set forth above, the investors will have no say in the operations of the business.
How can Flair Exchange help you?
We help aspiring entrepreneurs to raise funding and kickstart their venture using Crowdfunding. After successfully completing your offering on Flair Exchange, you will have your own army -the “crowd”- that supports you all the way on your journey.
You don’t have to work alone on your endeavor anymore. Investors that invested in you will have a financial interest to see you succeed and thrive in your venture.
How much money can my business raise on Flair Exchange?
You can raise from $50,000 to $5 million per offering under Regulation Crowdfunding. A business may launch follow-up offerings on Flair Exchange but can only raise up to $5 million under Section 4(a)(6) crowdfunding offerings during any 12-month period under Regulation Crowdfunding.
Who can fundraise on Flair Exchange?
We can only accept US registered businesses.
How can I start fundraising on Flair Exchange?
After creating your free account on Flair Exchange, press the “Get Funded” button on top to complete and submit your application. We will review the information you provided us and respond within three business days.
Once we determine that we could help you in fundraising, we will assist you in drafting Form C. You and your lawyer must review the draft and add any missing information you believe relevant for the investors to know.
What is a Form C?
Form C is a document the issuer must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the business and its offering and is a condition to making a Regulation CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered. Investors should read the borrowing business’s entire Form C before making an investment.
After successfully fundraising on Flair Exchange, do I need to file annual reports?
Pursuant to Reg CF, each Issuer that posts offerings of securities on Flair Exchange is required to annually file with the SEC a Form C-AR and financial statements no later than 120 days after the end of the Issuer’s fiscal year. Issuers can stop filing annual reports in the event (i) that you have fewer than 300 stockholders of record after filing at least one Form C-AR in the last year, (ii) the business total assets are equal to or less than $10 million after filing a Form C-AR for at least three years prior, (iii) you undergo a liquidation or dissolution or (iv) you or another party repurchased all of the securities issued in reliance upon Regulation CF, including any payment in full of debt securities or any complete redemption of redeemable securities.
Flair Exchange encourages all issuers to continue filing annual reports even after meeting certain requirements and becoming eligible to stop filing annual reports.
What should I include in the annual report?
The Form C-AR should contain updated disclosure substantially similar to that provided in the Issuer’s initial offering statement on Form C, including information on the Issuer’s size, location, principals and employees, business, plan of operations and the risks of investment in the Issuer’s securities; however, offering-specific disclosure is not required to be disclosed in the Form C-AR.
What will be the costs for fundraising on Flair Exchange?
You can create a free account on Flair Exchange and submit your application for review.
We will only charge you once you have a successful fundraising on our platform. Flair Exchange charges 5% of the total amount raised. For example, if you successfully raised $50,000, Flair Exchange will charge you $2,500 once we finalize the deal.
As a founder, will Investors be able to contact me directly?
No. Flair Exchange will not share your personal or business contact details. We expect all communications to be within our platform either using direct messaging or answering the Q&A on your campaign page.